Dr. Martin Hash Podcast

The 16^th Amendment to the U.S. Constitution, ratified in 1913, is where federal Income taxes come from; before that, nothing. The fact is, as long as production matches consumption, no taxes are necessary; simply issue money as needed, what's the downside? The knee-jerk reaction to printing more money is always the cry, “inflation!” but why? Does a loaf of bread become more expensive just because there's more money? As long as there are Market Forces, if a baker raises prices unilaterally, people will stop buying their product and get their bread from a cheaper competitor. No, inflation in a Free Market system only occurs when more people want something than there is available, and we have way over-capacity of most commodities because we are a Free Market system.

The problem with printing money instead of taxing is dishonesty, both fiscal and actual, that will occur due to lack of feedback in government spending. Why not fund every Special Interest program that comes along? Why not give everyone money so they don't have to work? Though the answer is simple: because those things drive up consumption without matching production; the people who get elected are there because they won a popularity contest, not for their intelligence, competence, or knowledge. Still, knowing that, plus the fact that the Social Safety-net, like Social Security, can be paid for by printing money, won't leave anybody in the streets.